GST Clarification on Printing Contracts – Goods vs. Services (Circular No. 11/11/2017-GST)
<h3><strong>Key Highlights from CBIC Circular No. 11/11/2017-GST</strong></h3><p>On <strong>October 20, 2017</strong>, the <strong>Central Board of Indirect Taxes and Customs (CBIC)</strong> issued <strong>Circular No. 11/11/2017-GST</strong> to resolve confusion over the <strong>tax classification of printing contracts</strong>. The clarification determines whether a <strong>printing transaction</strong> should be treated as a <strong>supply of goods or services</strong> based on the <strong>principal supply</strong> concept.</p><h3><strong>1. Understanding Principal Supply in Printing Contracts</strong></h3><ul><li><strong>Defined under Section 2(90) of the CGST Act</strong>, principal supply refers to the dominant element in a <strong>composite supply</strong>, with other elements being ancillary.</li><li>The classification of printing contracts <strong>depends on what is more significant</strong>—the supply of content or the supply of physical materials.</li></ul><h3><strong>2. When Printing is Considered a Supply of Services (Heading 9989)</strong></h3><ul><li>If a customer <strong>provides content</strong> (e.g., books, brochures, annual reports) and the <strong>printer only supplies the physical material (like paper and ink)</strong>, the dominant supply is <strong>printing services</strong>.</li><li>In such cases, the transaction is classified as a <strong>supply of services</strong> under <strong>Heading 9989</strong> of GST service classification.</li></ul><h3><strong>3. When Printing is Considered a Supply of Goods (Chapter 48 or 49)</strong></h3><ul><li>If the printer <strong>designs and produces printed products</strong> such as <strong>envelopes, boxes, letterheads, wallpaper, napkins, or tissue papers</strong>, and the primary value comes from the <strong>physical materials</strong>, then it is classified as a <strong>supply of goods</strong> under <strong>Chapter 48 or 49 of the Customs Tariff Act, 1975</strong>.</li><li>The printing activity is merely <strong>ancillary to the supply of goods</strong> in these cases.<a href="https://cms.plasament.com/storage/chirag-singla/circularno-11-gst-2.pdf">circularno-11-gst-2</a><br> </li></ul>